Tax Fraud Office Pursues Sheikh Gulzar
By Emma Harwood
Hastings Pier owner Sheikh Abid Gulzar was fined thousands of pounds last week for breaching tax regulations along with two of his companies which had been ‘trading illegally’, according to HMRC’s Fraud Investigation Service.
The Eastbourne-based hotelier pleaded guilty at Hastings Magistrates Court on Wednesday 27th February to failing to pay £61,873 up front in security bonds for Albany Lions Hotel Ltd and Mansion Lions Hotel Ltd.
HMRC had issued a notice of requirement in March 2017 demanding that both companies, which were incorporated in December 2015 and registered with PAYE in early 2017, pay £39,686 in PAYE and £22,187 in National Insurance contributions in advance, because previous and existing companies owned by Mr Gulzar had run up six-figure debts under this heading.
The 73-year-old businessman’s appeal against this notice was dismissed by a tribunal last July 2018.
Hastings Magistrates Court heard that Mr Gulzar had not paid any of the sum owed so far.
He was fined £8,000 as sole director of both companies, while each company was also fined £4,000. He was given until 13th March to pay the total of £16,680 imposed in fines, court costs and victim surcharges on top of the debts due.
During the hearing speaking for the Crown Prosecution Service, Elizabeth Green told magistrates that “the seriousness” of Mr Gulzar’s offences was that, as director, he had previously taken the national insurance and PAYE out of employees’ pay packets and not handed it over to HMRC. “The money not paid was money which did not belong to Mr Gulzar or his companies.”
“It was money which he had taken to pay on behalf of these employees, so it affects these employees in respect of their national insurance contributions, she said.
Looking uncharacteristically dishevelled and wearing a long dark overcoat, Mr Gulzar was flanked by his adviser Manasdeeph Singh. He was repeatedly asked by magistrate Peter Dass to explain why he still had not paid the bonds ahead of trading, as required by law.
Mr Gulzar stressed that he wanted to pay the minimum fine required within 24 hours, and that he had lived and worked in the country since the age of 19. He said that he had been in touch with Amber Rudd MP because he was not receiving a state pension. Mr Dass asked him to keep to the point.
Mr Singh was also asked to explain why the money had not been paid. He replied that he and Mr Gulzar had taken legal advice and been advised on Monday that they should pay the bonds. “Why didn’t you pay on Monday then?” asked Mr Dass.
In handing out the fines, Mr Dass said he had taken into consideration Mr Gulzar’s guilty plea but that the court took a serious view of the offences.
“You have taken money from employees and you have not given it to HMRC who it belonged to.”
“You made things worse because you delayed for a lengthy period of time,” he added.
Richard Wilkinson, Assistant Director of HMRC’s Fraud Investigation Service, said: “HMRC made numerous attempts to engage with Gulzar, who was trading illegally as he failed to pay the security bonds and then tried to thwart the prosecution. It’s only right that we tackle those businesses who fail to play by the rules.”
A history of tax liabilities
HMRC issued its notice of requirement in March 2017 demanding the upfront payments because two companies, Boship Farm Hotel Limited and Albany Lions Hotels Ltd had taken over from predecessor businesses which owed combined sums totalling over £144,000 in PAYE, NIC and VAT. Mansion Lions Hotels Ltd had meanwhile taken over from its predecessor, Lions Hotels Ltd which went into liquidation in January 2017 with a PAYE and NIC debt of £260,013.05.
At the time the notice was issued, other businesses in the ownership or under the control or influence of Mr Gulzar also owed tens of thousands to HMRC: Lions Cub Nursery which owed £16,534.68 PAYE and NIC, Lions Pier Ltd, owed £46,565.81, while Chatsworth Hotels Ltd, went into liquidation in January 2017 with a PAYE debt of £39,217.98.
HMRC can require new companies to pay a deposit, or security, where there is a serious risk the tax will not be paid, based on their history. The amounts required by HMRC were calculated as four months average NIC and PAYE payments from predecessor businesses.
It is understood that another of Mr Gulzar’s companies, Boship Lions Farm Hotel Ltd, also incorporated in 2015, may be subject to separate prosecution.
It is not clear whether his most recent company Hastings Lions Pier Ltd, which was incorporated in 2018 shortly before Mr Gulzar bought Hastings pier and has been the operating company for trading purposes there, has also been required to produce security bonds up front as protection against further defaults in NIC and PAYE contributions.
Meanwhile a further company Lions Cub Nursery Limited has applied to be dissolved, but the initial striking off from the companies register was suspended in January this year after an objection was raised. The normal reason for such an objection is that a creditor, which may or may not be HMRC, seeks payment of a debt that would
not be collectable following dissolution.
More Company Debts, Another Court Reverse
Three of Sheikh Gulzar’s companies, Lions Pier Limited, Albany Lions Hotel Limited and Boship Farm Hotel Limited, were back in Hastings County Court on Monday, purporting to dispute debts – not owed to HMRC this time but to their gas suppliers Opal Gas.
Combined judgments totalling £11,372 in respect of unpaid debts had been entered by Opal in separate amounts against the three companies in December, and they were making applications to set each aside. However Judge Venn gave the applications short shrift, pointing out to the companies’ advocate that the paperwork presented to her failed to submit any admissible evidence as to why the debts were not correctly calculated. After some legal argument the applications were withdrawn, and a costs order of £1,500 made against the companies to add to the existing debts.
The companies were given a maximum of seven days to submit fresh applications if Mr Gulzar, who is the sole director of each, chose to do so.
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